PCGG vs. SANDIGANBAYAN (Fifth Division), LUCIO C.

TAN, et al

NATURE:
This case is prima impressiones and it is weighted with significance for it concerns on one hand, the efforts of the Bar
to upgrade the ethics of lawyers in government service and on the other, its effect on the right of government to recruit
competent counsel to defend its interests.

FACTS:
In 1976 GENBANK encountered financial difficulties because it extended considerable financial support to Filcapital
Development Corporation causing it to incur daily overdrawings on its current account with the Central Bank. Later, the
Central Bank found out that GENBANK had approved various loans which were doubtful and uncollectible. As a
bailout, the Central Bank extended emergency loans to GENBANK which reached a total of P310 million.
Despite the mega loans, GENBANK failed to recover from its financial woes.

On March 25, 1977, the Central Bank issued a resolution declaring GENBANK insolvent and ordered its
liquidation.

On March 26 to 28, 1977, a public bidding of GENBANKs assets was held wherein the Lucio Tan group submitted
the winning bid. Subsequently, former Solicitor General Estelito P. Mendoza filed a petition with the then Court of
First Instance praying for the assistance and supervision of the court in GENBANKs liquidation as mandated by
Section 29 of Republic Act No. 265.

In February 1986, EDSA I revolution toppled the Marcos government. Thereafter, President Corazon C. Aquino
established the Presidential Commission on Good Government (PCGG) to recover the alleged ill-gotten wealth of
former President Ferdinand Marcos, his family and his cronies.

On July 17, 1987, PCGG filed with the Sandiganbayan a complaint for reversion, reconveyance, restitution,
accounting and damages against respondents Lucio Tan, et al. Respondents were represented by Estelito Mendoza
(Solicitor General during Marcos time).

On February 5, 1991, the PCGG filed motions to disqualify respondent Mendoza as counsel for respondents Tan, et
al because of his participation with the liquidation of the GENBANK, which is inconsistent with his former function as
Solicitor General and his present employment as counsel of the Lucio Tan group.

On April 22, 1991 the Second Division of the Sandiganbayan issued a resolution denying PCGGs motion to
disqualify respondent Mendoza. It further ruled that respondent Mendoza’s appearance as counsel for respondents
Tan, et al. was beyond the one-year prohibited period under Section 7(b) of Republic Act No. 6713 since he ceased to
be Solicitor General in the year 1986.

ISSUE: WON Rule 6.03 of the Code of Professional Responsibility applies to respondent Mendoza.

RULING:
No. Code of Professional Responsibility, Rule 6.03 - A lawyer shall not, after leaving government service, accept
engagement or employment in connection with any matter in which he had intervened while in said service.

First, the matter where respondent Mendoza got himself involved was in informing Central Bank on
the procedure provided by law to liquidate GENBANK thru the courts and in filing the necessary petition. He advised
the Central Bank, on how to proceed with the said banks liquidation and even filing the petition for its liquidation in Sp.
Proc. No. 107812 in the then Court of First Instance. The advice given by respondent Mendoza on the procedure to
liquidate GENBANK (now Allied Bank) is not the matter contemplated by Rule 6.03 of the Code of Professional
Responsibility, which the American Bar Association (ABA) in its Formal Opinion 342, defined matter as any discrete,
isolatable act as well as identifiable transaction or conduct involving a particular situation and specific party, and not
merely an act of drafting, enforcing or interpreting government or agency procedures, regulations or laws, or briefing
abstract principles of law. It is clear as daylight that is clear as daylight in stressing that the drafting, enforcing or
interpreting government or agency procedures, regulations or laws, or briefing abstract principles of law are acts
which do not fall within the scope of the term matter and cannot disqualify.

Second, the subject matter of Sp. Proc. No. 107812 is not the same nor is related to but is different from the subject
matter in Civil Case No. 0096. Civil Case No. 0096 involves the sequestration of the stocks owned by respondents
Tan, et al., in Allied Bank on the alleged ground that they are ill-gotten. It goes without saying that Code 6.03 of the
Code of Professional Responsibility cannot apply to respondent Mendoza because his alleged intervention while a
Solicitor General in Sp. Proc. No. 107812 is an intervention on a matter different from the matter involved in Civil Case
No. 0096.

Lastly, the intervention contemplated by Rule 6.03, only includes an act of a person who has the power to influence the
subject proceedings. Thus, it cannot be insubstantial and insignificant. The intervention of respondent Mendoza in Sp.
Proc. No. 107812 is insignificant and insubstantial.